{"id":5415,"date":"2023-10-24T10:43:43","date_gmt":"2023-10-24T10:43:43","guid":{"rendered":"https:\/\/www.bainesjewitt.co.uk\/blog\/?p=5415"},"modified":"2023-10-24T10:43:45","modified_gmt":"2023-10-24T10:43:45","slug":"why-you-should-use-double-entry-bookkeeping-in-your-business-finances","status":"publish","type":"post","link":"https:\/\/www.bainesjewitt.co.uk\/blog\/why-you-should-use-double-entry-bookkeeping-in-your-business-finances\/","title":{"rendered":"Why you should use double-entry bookkeeping in your business finances"},"content":{"rendered":"

The term “double-entry bookkeeping” is often mentioned as a cornerstone for managing a business’s finances.<\/span><\/p>\n

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But what does it mean, and why is it so universally adopted?\u00a0<\/span>\u00a0<\/span><\/p>\n

Below, we aim to demystify double-entry bookkeeping for small business owners and explain why it is crucial to your financial health – and why you might consider outsourcing this complex task to a professional accountant.<\/span>\u00a0<\/span><\/p>\n

What is double-entry bookkeeping?<\/span><\/b>\u00a0<\/span><\/p>\n

Double-entry bookkeeping is an accounting system that involves recording each transaction in at least two different accounts, typically as a debit in one account and a credit in another.\u00a0<\/span>\u00a0<\/span><\/p>\n

The underlying principle is the accounting equation, which states that assets must always equal liabilities plus equity.\u00a0<\/span>\u00a0<\/span><\/p>\n

Otherwise written as: A = L + E<\/span>\u00a0<\/span><\/p>\n

In layman’s terms, what you own (assets) is financed either by debt (liabilities) or investments (equity).<\/span>\u00a0<\/span><\/p>\n

The basics<\/span><\/b>\u00a0<\/span><\/p>\n